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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

How do the two major party conventions in 2016 compare? Did one party do a better job of appealing to the broad electorate better than the other? Who's more ready to be the next US president? Hillary or Trump? Who's better for ethnic and religious minorities, particularly Pakistani-Americans and Muslim-Americans? How was the DNC speech by Pakistani-American Khizr Khan, the father of slain war hero US Army Captain Humayun Khan, received by the DNC delegates and the broader US public? Was it effective in fighting Trump's overt Islamophobia?

Why is the Modi government arresting nearly a dozen Aam Aadmi Party (AAP) MLAs? Why did the Indian government choose to do it now? Is AAP leader Arvind Kejriwal justified in fearing for his life? Are these AAP leaders' arrests and various forms of intimidation timed to hamstring AAP's chances in upcoming state elections in Goa, Gujarat and Punjab?

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Ross Teverson, head of emerging-market strategy at $49 billion money manager Jupiter Asset Management, has a new star pick: Pakistan.

The country wasn’t even considered an emerging market when he decided to invest. Until earlier this summer, it was a rung lower—a “frontier” market, where stocks are notoriously hard to trade and the political climate is tumultuous. And yet, the benchmark KSE-100 stock index is up 20% in dollar terms this year, Exhibit A in how far global investors are willing to go for returns these days.

Sluggish growth in developed economies has prompted central banks to push interest rates down to zero and beyond, wiping out yields on government debt and sending investors into all sorts of fringe or previously unloved markets such as Pakistan’s.

By estimates, since March more than $67 billion has poured into a group of 30 emerging markets tracked by the Institute of International Finance. That number doesn’t include money heading to markets such as China and Russia, where information on foreign buying is limited.

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“Emerging markets have been broadly out of favor with global investors for the better part of four years,” said Mr. Teverson, whose investment in Pakistan helped his fund gain 17% this year through June. “When you have seen an asset class out of favor for so long and you see valuations so low, that inflow can be sustained for a long period.”

Commercial bank credit and bank investments are on the rise in Pakistan on the back of a significant uptick in the economy.

The new monetary policy and the benchmark discount rate, expected to be announced later this week, are likely to strengthen this trend.

International financial organisations, the ministry of finance and the State Bank of Pakistan (SBP), the central bank, report that the economy is in an expansionary mode and will continue to be so in the next two years.

"We expect gross domestic product [GDP] growth to rise further in fiscal year 2017. The actual GDP growth in fiscal year 2016 was 4.7 per cent - a record high for the last 12 years despite international challenges," say economists.

According to the SBP, the government envisages a higher GDP growth of 5.7 per cent in fy-17. The banking system will gain further strength and earn larger profits as economic growth increases.

The SBP issued a review of the country's macroeconomic performance, with a specific reference to the recent monetary policy which ensured a rapidly declining benchmark discount rate and the lowest interest rate of 5.25 per cent charged by commercial banks, a 42-year low.

ReformsFinance Minister Ishaq Dar said: "All stakeholders are satisfied with the country's macroeconomic stability, but they should continue the reform process and pursue policies that will enhance and fast-track growth and include all sections of society, business and the economy."

Saeed Ahmed, acting governor of SBP, said: "The monetary performance remained satisfactory during the quarter ended June 2016. Forex reserves reached the highest level of $23 billion." It will expand exports and imports, which, in turn, will benefit banks, the financial, economic and industrial sectors.

All these stakeholders are upbeat on the economy's growth after positive reports from the International Monetary Fund (IMF), the World Bank and Manila-based Asian Development Bank.

The IMF said: "Pakistan's economy is growing at its quickest rate in eight years. Investor confidence has slowly returned to a country that was battered by the global financial crisis."

Bank investments are rising but deposits are not growing that much, reported the SBP. Credit and investments provided by banks rose in the first half of 2016 compared to the like period of 2015, it said.

"This was despite the fact that deposits saw a fall in growth in the same period. The banks provided additional funds for credit and investment from money they borrowed from SBP."

Liquidity crunchThe central bank injected Rs1.79 trillion on July 11 and Rs1.13 trillion on July 15 into banks to help overcome their liquidity crunch and expand credit to the private sector. One of the key causes of the commercial banks' liquidity crunch was "the borrowing by the government to cover its budgetary gap."

"Banks' deposit growth fell by almost 50 per cent in the first nine months from July to March of the previous fiscal year," the SBP reported.

In a report for the third quarter of fiscal year 2016, the SBP said private sector deposits increased by Rs149.4 billion during July-March, less than half the rise in deposits recorded in the like period of fy-15.

But the plus point is that banks' advances rose at an eight-year high of seven per cent in the first half of 2016 on the back of growing credit demand.

The banking sector advances-to-deposits ratio increased by 51 per cent in June 2016, up from 50 per cent in June 2015. At the same time, the investment-to-deposit ratio increased to 75 per cent in June 2016, up from 64 per cent in June 2015.

The ministry of planning, development and reforms would launch an economic long march on August 11 on the occasion of the second anniversary of the government's Vision 2025 programme.

A scorecard of government's achievements during the last two years as well as targets set for next 10 years would be presented.

The slogan of the economic long march would be "Lets work harder, better and smarter", a senior official said here on Friday.

The Vision 2025 was announced two years ago after complete consultation with all the stakeholders while provinces were also taken on board to make the country a model economy.

Pakistan, he pointed out, was being termed as an emerging economy and all the leading and credible international organizations were viewing us a turned-around economy.

He gave statistics regarding GDP growth which has increased from 3.7% to 4.7%, remittances have doubled to $ 20 billion, Foreign reserves have swelled from $10 billion to record $23 billion while Pakistan Stock Exchange (PSX) index has rocketed from 12,000 to nearly 40,000.

Out of US$ 46 billion under China Pakistan Economic Corridor (CPEC), projects worth more than US$ 10 billion had already hit the ground while remaining schemes were in advanced stages of the pipeline.

Giving details of power production in next few years, he said, 3600 MW electricity would be produced through LNG, Under CPEC, 1320 MW by Port Qasim and 1320 mw by Sahiwal will also come in production next year, Chashma Nuclear Plants are also expected to add 600 mw. Jamshoro Power Project being completed by Asian Development Bank, would start producing 1320 MW by year 2018.

Work was under progress on 2000 MW Thar project and 1320 MW HUBCO project which would be completed by the year 2018-19, he added.

About infrastructure development, he said, Motorway from Havalian to Thakot and Multan-Sukkur of Lahore-Karachi Motorway was being completed at a fast pace.

On the Western route of the CPEC, he said, Gawadar port would be linked with Quetta by end of this year opening enormous opportunities for Balochistan.

The road from Burhan to DI Khan would be completed by June 2018, he said and added, the Gilgit-Baltistan would be developed as a model of environmental economy.

He mentioned about the work on Dasu and Diamir-Bhasha dams and the generation of wind and renewable energy as well.

He said, Pakistan Railways was being modernized with Rs.117 billion investment while the number of PIA aircraft had been doubled.

He said, unemployment was decreased from 6.24 percent in 2013 to present 5.94 percent, adding, while the country has witnessed reduction in poverty. However, due to energy crisis it couldn't be faster. As energy situation improves, there will be more investment and jobs, which will help in fighting unemployment.

He said, government has more than doubled allocation for Higher Education from Rs 100 billion to Rs 215 billion. Pakistan is becoming hotspot for IT entrepreneurship and start ups.

He said, Rs.173 billion were allocated for improvement in the existing transmission and distribution systems to bear burden of increased electricity production in the next two years.

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San Francisco based Cloudcade has announced it will invest $6 million to set up a game development studio in Lahore, Pakistan, according to Venturebeat.

The Lahore studio will be led by Ammar Zaeem, cofounder of Pakistan’s mobile game studio Caramel Tech which already has a team of 50 engineers.
The move is a big investment into Pakistan as a tech hub, and it shows how the game business is expanding around the globe.

Cloudcade:

Founded by Di Huang in 2013, Cloudcade is known for its popular multiplayer game "Shop Heroes" that pits players against each other in a competition to create the best shop they can. If a player can make a better store and perform more tasks than his or her rivals, he or she wins.

The game is available on the Apple iOS App Store, Google Play, Samsung Galaxy Store, Amazon, Kongregate, and Facebook. It is now also supported on the Apple Watch.

43.5% of Indians, the highest percentage in the world, say they do not want to have a neighbor of a different race, according to a Washington Post report based on World's Values Survey.

About Pakistan, the report says that "although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch".

Housing Discrimination:

It appears that there is a small but militant minority in Pakistan that is highly intolerant, but the vast majority of people are tolerant. My own experience as a former Karachi-ite is that there is little or no race or religion based housing segregation, the kind that is rampant in India where Muslims are not welcome in most Hindu-dominated neigh…

Pakistan's human development ranking plunged to 150 this year, down from 149 last year. It is worse than Bangladesh at 136, India at 130 and Nepal at 149. The decade of democracy under Pakistan People's Party and Pakistan Muslim League (Nawaz) has produced the slowest annual growth rate in the last 30 years. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President Musharraf's rule, according to the latest Human Development Report 2018.

Human Development in Pakistan:

UNDP’s Human Development Index (HDI) represents human progress in one indicator that combines information on people’s health, education and income.

Pakistan saw average annual HDI (Human Development Index) growth rate of 1.08% in 1990-2000, 1.57% in 2000-2010 and 0.95% in 2010-2017, according to Human Development Indices and Indicators 2018 Statistical Update. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President M…

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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